Direct cash transfer casualty of election year?

Ever since P. Chidambaram came back to the finance ministry, he has heroically tried to postpone economic disaster, mostly with assurances and promises. Photo Courtesy: Issei Kato / Reuters

Yet another Parliamentary session is about to begin and the sky above Edwin Lutyens’ masterpiece is already dark.

Many reforms that have been announced are yet to materialize. Some, such as the direct cash transfer scheme, have been put on the back-burner. A senior Congress leader says nothing will happen until elections are over. “The party leadership is scared it may backfire,” he says.

These days hardly any business gets done in Parliament. The new normal is much hullabaloo followed by adjournments. The session beginning Thursday promises to be yet another.

There are a number of legislations such as the Food Security Bill, Lokpal Bill and perhaps even the Judicial Accountability Bill that are supposed to be tabled.

The highlight of the session will be the national budget. P Chidambaram returns to present it, after four years of Pranab Mukherjee’s tepid show. The session will see the last full national budget of the United Progressive Alliance government-Mark II. Ever since he came back to the finance ministry, Chidambaram has heroically tried to postpone economic disaster, mostly with assurances and promises. But the economy has continued to slip as the country’s trade balance widens, industrial production slows, consumer price inflation stays high and investments remain a trickle.

The finance minister’s main worry is soaring expenses and disintegrating public finances but the UPA’s concern is the elections scheduled for 2014. A budget fulfilling both these demands is humanly impossible. The UPA’s image is in tatters and the government itself is surviving on the tenuous support of the Samajwadi Party led by that great opportunist Mulayam Singh Yadav and Bahujan Samaj Party led by the mercurial Mayawati.

It is clear that no one wants an election before time. A senior Congress leader half joked that even if his party were to want, its allies will never allow. Although Mulayam Singh has repeatedly told his cadres to be prepared for polls in 2013 itself those who know him say that is more to prevent complacency in the party rank and file. An internal assessment by the party is said to have shown a sharp decline in the SP’s popularity in favour of BSP, especially among Brahmins and Muslims, crucial swing factors in Uttar Pradesh that sends 80 legislators to the Lower House. The SP is making its moves, though.

The SP government wants 17 most backward castes to be included in the list of scheduled castes which will help them get a slew of benefits. Last week it sent the proposal to the Centre, making space for an issue to haggle over and lure away Mayawati’s backward caste supporters. It is an old proposal that Mulayam had tabled in 2005 but withdrawn by Mayawati when she succeeded him.

The principal opposition in Parliament, the Bharatiya Janata Party is a divided house. It does not have a clear strategy. Most senior leaders in the party fancy their chances to be prime minister should the party win. They present a picture of solidarity in public but snipe at each other in private. Narendra Modi is the only person with a clear and ruthless strategy. His juggernaut is gathering pace and the BJP may be forced to toe his line. That means Modi, to whom winning is now second nature, will face off with Rahul Gandhi, for whom losing is becoming a habit.

At this time, Chidambaram is expected to deliver a budget that is tough as well as populist. Investors are keenly watching whether he will present a road-map for fiscal consolidation and voters are expecting more doles. It is important for the government’s credibility; with the voters and investors. That is a tough ask, especially when options are limited.

The minister does not have enough money at his disposal to splurge on populist projects. He has promised investors, Indian and foreign, that his prime concern is fiscal discipline. One key element of that is checking leakages and inefficiencies in government funded schemes. A reform that may have helped — direct cash transfer of government subsidies — is off the table, according to a senior Congress leader.

Though the UPA announced pilots with much fanfare, the Congress leadership is believed to have chickened out. The leader says the party is scared to implement it widely because it is a double-edged sword. “If it works well it will bring the votes. But it can also backfire badly.”

To be safe, party leaders have agreed to keep direct cash transfer in the chiller until the elections are over. It will be periodically taken out to keep the topic warm but nothing concrete will happen.

Instead, the Congress is counting on ant-incumbency to help return to power. Except four majors, the states are ruled by the BJP and regional parties. Congress is in power in 10 more states, albeit small ones. The senior leader says if the Congress gets its seat allocation right, it has the advantage in states ruled by others. The party believes it has to just sit tight and people will do the rest, irrespective of the scams and scandals.